The Hidden Human Costs of Suspending India-Pakistan Trade

When economists talk about the post-Pulwama era, they often forget about one important group – the traders living in border areas.

The post-Pulwama era is a different one for India and Pakistan, and for research practitioners like me. I say this based on nearly a decade of research experience and travel memoirs from 2019-20 when I met, one-on-one, over 500 stakeholders in Amritsar, Dubai, Uri and Poonch, exposing myself to the vulnerable social lives of people living in border areas.

It was February 16, 2019 when the news broke. It was a tweet from Arun Jaitley, the former finance minister:

“India has withdrawn MFN (Most Favoured Nation) status to Pakistan after the Pulwama incident. Upon withdrawal, basic customs duty on all goods exported from Pakistan to India has been raised to 200% with immediate effect. #Pulwama”

Over the next few days, media in both India and Pakistan was flooded with a narrative that the bilateral trade between India and Pakistan was too small for its suspension to have any significant impact on the two countries’ national economies. For context, as per 2018-19 data, Pakistan’s exports to India accounted for 2% of its total exports, and 3% of its imports came from India. For India, its exports to and imports from Pakistan were 0.63% and 0.10% of its total exports and imports, respectively.

Economists commenting on trade policy pay little attention to the impact of trade policy on the lives of traders. International trade as a subject for policy-making as well as research is generally focused on from a macro level. What we inadvertently overlook is thousands of families in the border areas whose sole dependence for livelihood is on border trade. Out of curiosity, I decided to go to Amritsar to gather an on-ground understanding of how local stakeholders were impacted.

I met children being pulled out of private schools because their fathers had gone out of business. I met a truck owner at Attari Truck Union who decided to move back from Hong Kong to Amritsar in 2010, seeing the potential of Wagah-Attari trade, and bought 30 trucks. I met a father and his three sons who were all making a living by loading and unloading trucks; while all of them went out of work, the only ‘literate’ son managed to find a job as a granthi (priest) for a two-hour shift at the Gurudwara Sahib.

I met a dry date importer in Amritsar’s Majith Mandi who explained how the politics of trade took away his only source of livelihood. Ninety-nine percent of India’s dry date imports came from Pakistan alone. Nearly 500 traders in India sourced dry dates from Pakistan, and 1,000 women were dependent on hand-cutting dry dates to earn a living. While all of them have gone out of business, dry dates – which used to be the only economical option, available at Rs 30-100 per kg and rightly called the poor man’s dry fruit – became expensive by almost 300%.

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What moved me the most was my interview with a staff member at Central Warehousing Corporation weigh-bridge, who told me, “I was getting married on February 18, 2019. Post Pulwama, when the trade stopped, the bride’s family called off the marriage, saying that I did not have a source of livelihood any more. I neither have a job, nor a family today.” He broke down crying; I broke down too. I continued to meet people and weep, not realising why and how. While most talked their hearts out, few were sceptical, wondering why this solo woman was interested in all this in the first place.

Seeing their plight first-hand, I felt it was incumbent on me to begin documenting it. In the months that followed, defying the virus and resistance from colleagues and family, I made several trips – to Dubai to understand re-routing of trade, to Uri and Poonch, to understand the impact of suspension of cross-Line of Control trade, and many to Amritsar, not just because I belong to Punjab but because Wagah-Attari trade remains at the core of any bilateral economic engagement between India and Pakistan.

In Uri, I met a labourer who told me, “I used to earn more than Rs 12,000 a month when the LoC trade was at its peak. I have a sister at home who is a chronic diabetes patient. I cannot afford her monthly treatment. Even buying a Rs 25 test strip, which she needs every day, is difficult for me today.” There were many more – traders, custom house agents, filling stations, tyre puncture shops, mechanics, dhaba owners, truck drivers, porters and helpers – who opened up, hoping that their hardships would finally get an audience.

Deserted Trade Facilitation Centre, cross-LoC trade. Photo: Nikita Singla

Overall, according to my interactions in Punjab and J&K, more than 50,000 people in Amritsar, and about 25,000 people in Uri and Poonch, were directly affected because of their breadwinners’ dependence on bilateral trade.

In the interest of space and time, I will not attempt to document everything here. But what Pulwama taught me is three key lessons: a) It put a face to the mere trade statistics that we as economic researchers juggle with. It brought me closer to the human side of trade; b) It gave me insights into the critical and often unaccounted role of border economies in foreign trade policy; and c) It helped me understand that trade is not a switch-on or switch-off phenomenon. After the sudden suspension of India-Pakistan trade, even the most optimistic traders on both sides learnt the hard way that betting livelihoods on politics was much riskier than was assumed.

Nikita Singla is Associate Director at Bureau of Research on Industry and Economic Fundamentals (BRIEF), New Delhi. She tweets at @nikitasingla17She has co-authored three reports on India-Pakistan trade post Pulwama: “Unilateral Decisions Bilateral Losses” on Wagah-Attari trade, “Dubai Angled Triangle” on informal trade via the UAE, and “Bridging the Divide” on cross-Line of Control trade.